With trade war tensions rising, and both the US and China pulling out the big guns investors are left with market swings that will leave many fearing the end of the cycle is near. Investors can rest knowing that these temporary swings are to just temporary. In the long run, these swings will be so minuscule compared to the gains that the market will make during that time.
Since November 22nd 1996 the S&P 500 has increased 291.62% without dividends reinvested, and with multiple major drops. Yet every time the S&P 500 dropped a few percentage points the market panicked. If you look carefully at the chart you will notice that the market had many small/medium drops before reaching each new all time high. When the market fell it eventually found a bottom, which served as a new low for the next bull run’s high. In short over a long period of time the market will go up.
The only time to fear market volatility is if you are going to need the money soon. In that case, you may not have enough time to recover your initial investment so you may be better off bitting the bullet and letting your money sit outside.
If you’re still scared about market volatility more specifically losing money, the stock market may not be for you.